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Lessons Learned – #2

The countdown of the Top 10 lessons I learned during 2010 is almost complete. Here’s #2:

Humility Dose– For a decade my beloved Texas Longhorns were a mainstay near the top of the college football rankings. This year, an ugly seven losses. Fallout? Offensive coordinator and special teams coaches fired; defensive coordinator resigned to become the head coach at Florida. Organizations occasionally face times like these. It will be interesting to see how Mack Brown handles his greatest leadership challenge.

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Does Competition Lower Prices?

Apple and its iconic leader Steve Jobs rank near the top of any list of great innovators. Dating back to the introduction of the Macintosh on Super Bowl Sunday 1984 – and the Orwellian ad directed by Ridley Scott – continuing through the iPod, iMac and now iPad… Apple keeps churning out the hits and changing industries.

After Amazon shook the publishing world with its Kindle electronic reader, most pundits felt it was a matter of time before Apple would introduce a better device. It took two years before last week’s announcement of a “truly magical product” that comes in full color, allows Internet access, works with all 140,000 Apps – and this is just version 1.0.

Of course, there’s a ‘dark side’ of any great story… and this one impacts consumers. Kindle pricing on new releases is $10 – a tremendous savings compared to buying the hardback; however, within days of the iPads’ introduction, Macmillan said it will increase e-book prices to $13-$15.

Amazon reacted by pulling Macmillan titles: “We have expressed our strong disagreement and the seriousness of our disagreement by temporarily ceasing the sale of all Macmillan titles. Ultimately, however, we will have to capitulate and accept Macmillan’s terms.”

So going forward, Macmillan will set prices and pay Amazon a 30 percent commission. Not surprisingly, that’s the agreement Apple made with major publishers. (And you thought all of the mystery and drama only happens inside the pages!)

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Quick Reflexes

Toyota instructed dealers yesterday to stop selling the Camry and seven other models due to the potential danger of accelerator pedals sticking. The company recalled more than two million vehicles – on top of the four million previously recalled because of the risk of a loose floor mat jamming accelerators.

Great move by Toyota to intervene before this issue leads to more accidents and perhaps tragedy. Engineers are working around the clock to determine the cause of the latest concern. Tough challenge for dealers who suddenly lost a significant part of their revenue stream and now have to deal with confused/angry customers. (I can only imagine how many calls their dealerships will take today with people asking, “Can I drive it or do I need to park it in my garage?”)

There is a great lesson here for all business leaders. You can’t wait until something happens to decide how you’ll react. Make contingency plans now for potential disaster later (think: weather-related disruptions; product delivery delays; bad publicity; sudden death of a key team member; etc.). While you won’t know the specific problem that will arise, you can decide how you will handle most situations.

Be sure you have in place procedures for knowing: a) Which essential employees need to be notified first; b) Who is authorized to speak for your organization and what consistent message will be delivered; c) How you will handle the inevitable media rush; d) What steps you will take to rectify the situation as quickly as possible; and e) When you will announce changes and provide status updates.

Since 1983, I have owned in succession three Toyotas and driven them a combined 350,000+ miles. They’ve been great cars – needing only minor repairs – and two of our children learned to drive on our current 2001 Camry. I’m guessing the smart folks at Toyota will figure this one out quickly… and get right back to work rebuilding trust in their highly respected brand.

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